Can You Pay a Credit Card with a Credit Card?

If you are looking for a definitive answer, it is a yes. However, have you considered opting for more convenient and cheaper option instead of a credit card? Read further to figure out what that other option is.

Paying a Credit Card with a Credit Card

To put into context, you can pay a credit card with a credit card, but it cannot be done directly – most credit card issuers will not allow payment of credit card debt through another credit card as paying a debt through another debt will not reduce the deficit for the credit card holder but merely passes on the liability from one book to another. Likewise, on the consumer end, you do not end up being debt-free, but instead, get entangled in a debt-trap – paying debts with debts. Moreover, the more debt you undertake to repay debt, further your credit score deteriorates.

However, there is a path around the technicalities, and the steps are:

  • Take an advance on your credit card.
  • Deposit that advance in your checking account.
  • Use the deposited funds to compensate off the credit card debt.

Similarly, the convenience checks sent by the issuer as well as credit card rewards can also be used for the same effect replacing the advance.

Needless to say, every transaction entails a transaction cost which, when calculated, may lead you to pay more than the original amount owed. Hence, the method of paying a credit card with a credit card should be your last recourse.

Using a Balance Credit Card

If you are an individual with a fantastic credit score, you should consider opting for a balance transfer card with a promotional APR of 0% or interest-free periods of 12 months or more. Such a card will provide you with a buffer period to pay off your credit card debt without incurring any finance charges. It is significant to mention that a solid credit score provides you with an option to avail a balance transfer card with extra benefits, whereas a poor credit score may deprive you of the access to a balance transfer card.

If you are in possession of multiple credit cards, another benefit of transferring balances to a balance transfer card is the simplification of your finances. If you have maxed out your credit cards, find it challenging to maintain track of various payment dates and end up accruing late fees, it makes sense to have just one card to monitor and with only one payment to fulfil each month. Also, another nifty feature is the ability to transfer other forms of debt, such as auto loans, electronics loans, and so on to your balance transfer card for availing various benefits.

Nevertheless, there are some caveats. Usually, there is a balance transfer fee involved, which will reduce the benefit derived from using a balance transfer card. However, there are cases wherein such a fee is waived off, but that is subject to the terms and conditions of the card – an option worth checking out. E.g., BankAmericard® Credit Card has zero transfer fee if the transfer is made within 60 days of issuance of the card, beyond that period any transfer would be subjected to transfer fees. Similarly, with regards to the balance transfer card, it is crucial that you be consistent and regular with your payments as a default or delay on your end could lead to discontinuance of promotional APR or interest-free periods and charging of interest from the date of issue of the balance transfer card. As a word of caution, since nothing lasts forever – any promotional APR or interest-free terms are bound to end after a particular time, so make it a point to utilise their benefit before the expiration of the period.

How to Decide When to Pay Off a Credit Card with Another Credit Card?

There are specific “Do’s” and “Don’ts” that are pivotal in ensuring that your debt is reduced to a minimum.

  • Do’s
    • Be prudent about your finances and avoid any leakages by digging deep into the causes of your expenses.
    • It is imperative that you be honest with yourself regarding your financial situation and take corrective measures to address it.
    • Be mindful of the terms and conditions of the credit card/balance transfer card, transferring your credit card amount to an account with low interest can work to your advantage.
  • Don’ts
    • Not advisable to seek a balance transfer card is to meet the minimum payments on your credit card debt, there lies a more significant problem in the form of overspending or lack of earnings on your end.
    • Avoid adding any new charges to your account while being regular with the payments.

Most often than not, people are short on cash due to their necessities outweighing income. If you fall into this category, here are some ideas to generate some extra money to pay off your debt:

  • Sell Stuff – Heard of a garage sale? Organise one and dispose of the items that are not required. You can also consider selling your car and opting for a reliable vehicle that’s less expensive – will help you save on maintenance as well as fuel costs. Double bonanza!
  • Downsize Home – The thumb rule is that if your mortgage or rent payment is higher than 35% of your net income, it signifies you are paying more than you should. Consider ditching that extra bedroom or parking space for something that efficiently checks all the points in your requirements for a home.
  • Side Hustle – The gig economy is a new and upcoming trend. You can use your spare time to freelance or sign up with Uber to fully-utilise your car or become a secret shopper. The possibilities are endless.

In simpler words, the more money you bring home, the lesser you have to worry about managing money.

Credit card debt is a menace if not addressed in time. With such high-interest rates, any delay in paying off credit card debt can attract penalties coupled with a steep interest. That being said, the use of a credit card to compensate off a credit card should be the last-ditch effort to draw yourself out of credit card debt, and it should be utilised once all other alternatives are exhausted including the option of a balance transfer card. However, the most reasonable and efficient way to knock out your debt is to save or earn more.